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Home Improvement 2006  

Paying the price

  Once you've attached a price tag to your next project, check out if and how you can afford it.
Remodeling? Make sure you're insured

You might think choosing a contractor and creating a renovation plan are the two most important considerations when it comes to planning a home improvement project. But if you have not considered your insurance needs, and made sure your property is adequately covered during the renovation process, you may be putting your investment in serious risk.

The time to contact your homeowners-insurance agent is before you begin renovations.

"You want to make sure your agent's there with you every step of the way," says Madelyn Flannagan, vice president of education and research for the Independent Insurance Agents & Brokers of America.

Your insurance agent can help you evaluate your needs and also help you make certain the contractors you use have enough insurance, including workers' compensation and general liability insurance, to cover any problems that may arise during the project. If the contractor damages your home during the job, his insurance policy will most likely kick in. But you don't want to leave that to chance. Not only should you double-check with the contractor's insurance company to make sure his policy is up-to-date, but you should let your homeowners-insurance agent look at the contractor's certificate of insurance.

"You want to make sure there's no misunderstanding about whose policy kicks in where," says Flannagan. "Talk to your agent to determine if there are any holes or gaps in the coverage that you need to be aware of."

Preparing for vacancy
If you leave your home while renovations are being done, you may be violating your current homeowners policy. Many policies have vacancy clauses, which state that you can't be away from your home for longer than a set period of time, such as 30 days or 60 days. In the event that you will be staying outside your home for a longer period of time while contractors are working, you will need to buy additional insurance coverage for that period of time.

Another factor that can affect the amount of coverage you need is whether your home will be exposed to outside elements. For example, if your roof is raised or a contractor will be replacing doors and windows, your home may be exposed to bad weather or even burglars who could get inside and steal some of your belongings.

"A lot of people take their roof off and expose their home to the elements," says Flannagan. "It's really not a typical home anymore during that time. So you just need to make sure that during the time that your home is open to the elements or being worked on that you have the right insurance policy in effect."

Builder's risk policies can be purchased to add additional coverage. Sometimes a contractor will purchase this policy, but if not, you can take one out yourself. Such policies protect furniture and equipment that has yet to be installed, so if you have uninstalled carpet or appliances lying around on the premises, the builder's risk policy gives you extra protection.

-- Posted: April 12, 2006
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